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• MEMO <br />To: Dean Lotter, City Manager <br />From: Dan Maiers, Finance Director <br />Date: June 20, 2008 <br />Re: Fund Balance Policy for General Fund <br />This report has been prepared for the City Council's June 240, worksession Policy Docket <br />item, Fund Balance Policy. <br />Current Status of General Fund <br />As .of December 31, 2007, the General Fund's fund balance was higher than the targeted <br />balance. The actual fund balance was $5,522,370, of which $5,515,202 is unreserved, <br />designated. The targeted balance for the December 31, 2007, unreserved, designated <br />portion was $4,389,400. The difference is $1,125,802. <br />The calculation of the targeted amount according to the City's Fund Balance Policy, is as <br />follows: <br />• Designated for Cash Flows $3,247,600 <br />Designated for Contingencies 1,141,800 <br />Total 00 <br />The Office of the State Auditor's Statement of Position recommends an unreserved <br />General Fund balance of 35% to 50% of the budgeted revenues and no less than five <br />months of operating expenditures. The General Fund's balance (43.0%) is consistent <br />with that recommendation. <br />Policy Reurdim Surpluses <br />The policy's section # V. UNRESERVED, UNDESIGNATED FUND BALANCE is as <br />follows: <br />C. Surpluses may be utilized in subsequent years' budgets. Subsequent years' <br />budgets may utilize up to 20% of the amount over the targeted balance. This will <br />allow the balance to be in compliance with the intent of this policy gradually over <br />five years, while allowing for future years' fluctuations. <br />20% of the surplus is $225,160 ($1,125,802 x .20). <br />I've included a copy of the City's Fund Balance Policy for your reference. The last two <br />years have ended with surpluses; however, in prior years there have been deficits as well. <br />Additional attachments include my May 9, 2008 memo reporting the year-end results for <br />